KUALA LUMPUR: Sentoria Group has a competitive advantage in acquiring land at a relatively low cost, and the company has been able to sustain a stable Ebitda margin of 20% or more since 2013, said Affin Hwang Capital Research.
The research firm said in its Tuesday company update that the counter has a trailing CY17 price-earnings of 8X, which is relatively low compared to its peers.
Affin Hwang Research said Sentoria offers affordable homes under government schemes and its opwn integrated resort townships.
"Group revenue is mainly driven by its property development division (85% of total in FY17). In-house affordable home sales contribute 58% of property
development revenue with the balance of sales to government housing schemes," it said.
Sentoria is also a niche developer specialising in integrated resort city development. It has adopted a resort city model in MOrib, Langkawi and Kuching following its successful project launches in Bukit Gambang Resort City.
Affin Hwang Research noted that Sentoria has RM349mil in unbilled sales, which is equivalent to 1.3x FY17 revenue.
"In FY18, the group plans to launch property projects worth RM592m out of total remaining GDV of RM9.3bn. Its ongoing projects saw good average take-up rates of 89% with RM109m in sales achieved in 1QFY18 or 24% of its RM450m target sales in FY18."
Sentoria believes that the 20% Ebitda margin can be maintained given the strong demand for affordable housing in its key operating areas and its competitive advantage in being able to acquire land at relatively low cost.
"Sentoria’s current trailing CY17 PER 8x and Price/Book of 0.8x are at discounts to most peers," said Affin Hwang Research.